New AMA Study Finds Lack of Competition Among Health Insurers

Most health insurance markets are dominated by one or two health insurers

For immediate release:Feb. 1, 2011

CHICAGO – The vast majority of commercial health insurance markets in the United States are dominated by one or two health insurers, according to a newly updated analysis released today by the American Medical Association.

The 2010 edition of Competition in Health Insurance: A Comprehensive Studyof U.S. Markets found that 99 percent of health insurance markets in the U.S. are “highly concentrated,” based on the 1997 U.S. Department of Justice and Federal Trade Commission Horizontal Merger Guidelines. This indicates a significant absence of competition among insurers. In 48 percent of metropolitan statistical areas, at least one insurer had a market share of 50 percent or more.

“The market power of health insurers places physicians and patients at a significant disadvantage,” said AMA President Cecil B. Wilson, M.D. “When insurers dominate a market, people pay higher health insurance premiums than they should, and physicians are pressured to accept unfair contract terms and corporate policies, which undermines the physician role as patient advocate.”

Physicians are the least concentrated segment of the health care sector with 78 percent of office-based physicians working in practices with nine physicians or less. Most of those are in either solo practices or practices of 2 to 4 physicians.

“The market power of health insurers continues to prompt anti-competitive concerns among physicians,” said Dr. Wilson. “To help restore a competitive balance to health insurance markets, the AMA urges the federal and state agencies to prohibit harmful insurance company mergers and adopt policies that would level the playing field between small physician practices and large insurers.”

Competition in Health Insurance: A Comprehensive Studyof U.S. Markets is free to AMA members. Non-members can purchase the study for $150. To order the study, please visit the AMA Store online, or call (800) 621-8335 and mention item number OP427110.

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Editor’s Note: Credentialed members of the media can obtain a free copy of the AMA’s newest study on competition in the nation's health insurance industry by contacting AMA Media Relations at: (312) 464-4430.